Kicking the can down the road again. Are you prepared for the consequences?

Posted by John Reed on Mar 16, 2017

Brett Bair is doing a series on the government again kicking the can down the road. In that regard, Trump, uncharacterstically, is ignoring his campaign promises like the usual politicians and acting just like Obama did in recent years.

A reader here recently asked why I could possibly thing the most economically powerful country in the world—the U.S.—could possibly need to worry about hyperinflation. One phrase: kick the can down the road.

That road is a dead end.

One of the big lessons I learned at Harvard Business School is size does not matter. Only ratios do. We have the largest national GDP in the world. That’s size. But we also are the biggest national debtor in the world after being the biggest creditor as recently as the first Reagan election. And our national debt to GDP ratio is near its all-time record level and that means our dollar is in an extremely precarious position in terms of future purchasing power.

Whenever you hear or see the phrase “kick the can down the road,” a pop-up ad should appear in your head with a picture of me holding my book on hyperinflation and pointing at it. Or alternatively, a picture of me saying “I told you so” when the ’flation hits the fan.

I’m not saying it will happen or that it will happen soon. No one knows. I CAN say that it WILL happen eventually if we do NOT stop kicking the can down the road. I will also say that my recommendations for protecting yourself are all low-cost and low risk, not any sort of gamble on hyperinflation happening soon. If it does not, you are about as well off with my advice. That’s in contrast to people telling you to buy gold. If you did that in January 1980 with gold, you would still be waiting for it to get back to the price then adjusted for inflation.